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Be Careful When Choosing a Bank

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By Pefkos @ Adobestock.com

Your Survival Guy wants your lazy cash working its tail off for you. That’s why I recommend my favored Treasury money market. But you have to be careful when choosing a bank. In The Wall Street Journal, Rachel Louise Ensign explains that not all banks are giving you what they advertise. She writes:

A few months after the Federal Reserve started aggressively raising interest rates in early 2022, Sam Kuperstein opened a savings account at online bank UFB Direct to earn more on his extra cash.

The Springfield, N.J., resident assumed the advertised 1.81% rate—which at the time was among the highest marketed by U.S. lenders—would keep rising as the Fed kept hiking. Then, last September, he found out that his rate hadn’t budged, even though the bank advertised a savings account that paid more than 5%.

The bank had rolled out a new, nearly identical savings account every few months over that period, giving the product a slightly different name each time. Like Kuperstein, some customers with older accounts were unknowingly stuck earning lower rates, even as the Fed raised interest rates over two years by about 5 percentage points.

 and CIT Bank attract deposits by paying rates far higher than typical bricks-and-mortar banks. Rates on these high-yield accounts generally rise alongside U.S. interest rates without depositors needing to take any action. But some customers say these lenders deceived them by advertising competitive rates while paying longtime customers lower ones. In some cases, only customers who were monitoring their bank’s every move could notice and respond to the changes.

“You think you’ll get a higher rate and it will keep going up,” said Ken Tumin, founder of DepositAccounts.com, a website owned by LendingTree that tracks banks’ account offerings. “But there are games they play to get deposits without having to pay the highest interest rates.”

Action Line: It’s just as important to pay attention to your banking as your investments. And it’s probably smart to separate the two. When you want to talk about your banking and investments, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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